US tech companies are spending more money to execute programs that assure foreign customers that their information is safe from prying eyes in the US.
IBM is spending $1.2 billion to build 15 new data centers, including in London, Hong Kong and Sydney, to lure foreign customers sensitive about the location of their data. Salesforce.com announced similar plans in March.
In another breadth, tech companies from Europe and South America, say they are gaining customers that are shunning United States providers.
All of these because of the revelations by Edward J. Snowden that tied these providers to a National Security Agency’s vast surveillance program, the New York Times reported.
“It’s clear to every single tech company that this is affecting their bottom line,” said Daniel Castro, a senior analyst at the Information Technology and Innovation Foundation. Mr. Castro predicted that the United States cloud computing industry could lose $35 billion by 2016.
Security analysts say tech companies have collectively spent millions and possibly billions of dollars adding state-of-the-art encryption features to consumer services, like Google search and Microsoft Outlook, and to the cables that link data centers at Google, Yahoo and other companies.
Customers concerned about data privacy
“We’re hearing from customers, especially global enterprise customers, that they care more than ever about where their content is stored and how it is used and secured,” said John E. Frank, deputy general counsel at Microsoft. The American software giant has been publicizing that it allows customers to store their data in Microsoft data centers in certain countries.
After the N.S.A. surveillance was revealed, a global steel manufacturer based in Britain demanded that its data with a Canada based software company not cross United States borders, the New York Times reported.
Gain for foreign companies
Runbox, a Norwegian email service that markets itself as an alternative to American services like Gmail, announced a 34 percent annual increase in customers after news of the N.S.A. surveillance. The email service says it does not comply with foreign court orders seeking personal information.
Last February, Brazil and the European Union which had used American undersea cables for intercontinental communication decided to build their own cables between Brazil and Portugal. They gave the contract to Brazilian and Spanish companies.
Brazil also announced plans to dump Microsoft Outlook for its own email system that uses Brazilian data centers.
“Issues like privacy are more important than finding the cheapest price,” said Matthias Kunisch, a German software executive who rejected United States cloud computing providers for Deutsche Telekom. “Because of Snowden, our customers have the perception that American companies have connections to the N.S.A.”